Natural gas markets initially tried to rally during the trading session on Wednesday but continue to see a lot of resistance at the $1.80 level. This is an area that has been important more than once and of course is a round figure so it makes quite a bit of sense that we would see pressure there. Ultimately, the market is in a downtrend and even if we break above the 1.80 level, then the 50 day EMA would come into play as well. I like the idea of fading rallies as I have for months now, and even if we were to break above there, I believe that the $2.00 level above that will then become the next major resistance barrier. If we were to break above, there then things would change rapidly but I can’t imagine a scenario where that happens with the coronavirus rating through the economy.
NATGAS Video 26.03.20
Furthermore, there is a significant amount of bearish pressure on this market due to the fact that the weather is warming in the United States and European Union, so at this point demand will fall even further. I fade rallies, but I don’t know how much further we can go to the downside with reasonable expectation. The $1.60 level underneath seems to be a bit of a floor at the moment and I don’t necessarily think that’s going to change in the short term, however if it does then we could be looking at the $1.50 level next. Ultimately, this is a market that remains as bearish as ever.